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ReliAscent's DCAA Blog

Changing Winds for DoD Federal Government Contractors

Posted by Mike Anderson on Fri, Sep 10, 2010 @ 09:04 AM

One of the most important skills for a small business owner is to be able to anticipate future changes in the market that will affect their business.  I think we face such a critical time right now in the world of government contracting.  Those businesses that support the Department of Defense in one way or the other have seen an increasing budget over the last 10 years or so.  We are starting to see signs that that may be coming to an end.  Oh the spending won't stop, please don't misunderstand.  What I think will stop is the ravanous increases and, to some degree, the "I have to have that for our military at any cost" mentality.  There was obviously some excess and some "fat" buildup in the budget over this time period.  Examples that this is changing are all around us.  The F-22 program was stopped.  Secretary Gates has announced recently that he will "save" $100 Billion over the next 5 years from the defense budget.  There is allegedly a "blacklist" being created as a result of the 2012 National Defense Authorization Act that could further cause difficulties for contractors.  President Obama is more than hinting that "outsourcing" of government functions should be brought back in-house.  Lockheed Martin announced a reduction of about 600 executives from their upper management ranks last week.  I think the Lockheed action is significant.  Lockheed is the nation's largest contractor (especially in the Defense market) and they are obviously taking steps to trim their overhead, batton down the hatches so to speak.  Everyone serving the defense market should take note and make preparations for the coming storm.  If you prepare properly now, the storm may not affect you as much.  If you are confused about what this means, give me a call and I'll be happy to discuss it with you.

Topics: government contracting, Government Contractors, DoD